PM's adviser warns on tax competitiveness

The chairman of the business advisory council to the prime minister has made his feelings known that the government must be 'extremely careful' when integrating new tax policies.

Written by Rachael Singh

Accountancy Age, 04 Mar 2008

The head of the prime minister's business council has made it clear that the government needs to be 'extremely careful' on tax policy.

Mervyn Davis, chairman of Standard Chartered and chairman of the prime ministers business council, has made it clear that the government need to be 'extremely careful' when trying to implement changes to capital gains tax and taxes on non-domiciles.

Davis has shown concern that the government need to take into consideration that the new tax policies do not inflict a 'hugely damaging' blow to the competitiveness of the UK's financial structure.

He told the Financial Times that his concerns over the less competitive tax regime had been aired in private and that 'individuals (on the council) have not been afraid to make that view very clear'.

Other members of the council include Sir Stuart Rose, chief executive of Marks & Spencer; Stephen Green, Chairman of HSBC; Tony Hayward, chief executive of BP; Sir Terry Leahy, chief executive of Tesco; Dame Marjorie Scardino, chief executive of Pearson; and Arun Sarin, chief executive of Vodafone.

Davis said 'The consistency and the nature of (the tax policy) has been hugely attractive to overseas people and to companies. We mustn't lose that competitiveness. It would be very bad for the UK (and) it would be hugely damaging for business.'

Business pressure groups have backed the government into partial retreats concerning the non-dom and CGT issues ahead of next weeks budget announcements.

Richard Lambert, director general of the CBI, has called for implementation of both sets of changes to be postponed for one year.